Capital Controls in Argentina Demonstrate Dangers of Government-Controlled Money

The current financial system, with governments and central banks controlling the flow of money, creates impediments for people’s economic freedom. Among them is the danger that the ruling class will try to hide its mismanagement of the country’s affairs by preventing people from voting with their wallets and trying to secure their savings on safer shores. The latest example of this comes from Argentina where capital controls are now back in effect.
Also Read: Argentina’s Peso Collapse Shows Governments Shouldn’t Control Money
Just An(other) Emergency Measure
Mauricio Macri of Argentina re-introduced capital controls on Sunday in an effort to prevent further collapse of the peso (ARS) rate and a possible default on bonds. All citizens were barred from making over $10,000 worth of conversions to foreign currency per month. Companies now have limitations on their ability to legally purchase dollars on the open market without authorization, crucial for trading with international partners or to give out dividends to shareholders overseas.
The move has initially rattled stock investors as well as ordinary savers, and there were even reports from the country of people lining up at banks on Monday to withdraw as much money as they could. Some are also turning to the black market to buy USD at a worse rate than the official one. This is reflected in the crypto markets where there is now around a 10% premium on the amount of needed to buy BTC compared with the global USD price.
Argentine Mauricio Macri
The return to these measures is largely seen as a desperate measure by the government, as Macri canceled the previous capital controls regime in one of his first actions in office after he came to power in 2015 promoting a free market approach to fixing the Argentine economy.
Speaking for the first time in public about the re-imposition of capital controls, Macri told a gathering of top business people in Buenos Aires on Wednesday that they are just a stop gap measure and not a long term policy. “We don’t like these measures. They are only justified in an emergency and for a limited time,” the Argentine leader claimed. “The controls were implemented with the objective to defend rate stability and savers. They were implemented to prevent greater harm, and designed to be as least invasive as possible.”
A Populace Already Accustomed to Limitations
Matías Bari, CEO and co-founder of Buenos Aires-based cryptocurrency platform Satoshi Tango, provided a view from the ground. He explained that after a couple of days of capital controls, things appear quite normal by local standards. Central bank statistics reveal that among those who regularly buy USD, more than 80% buy less than $10,000 monthly, and thus these new measures do not bother them. Businesses, on the other hand, are widely affected.
“Of course it affects the companies as they cannot send funds abroad nor buy USD as a store of value (they are able to buy USD to pay for imports or pay a debt),” Bari detailed. “These controls completely

This post was syndicated from https://.bitcoin.com/capital-controls-in-argentina-demonstrate-dangers-of--controlled-money/ and originally written by our friends Avi Mizrahi at https://news.bitcoin.com/feed/
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